ABC company needs a new CRM Now what

IT Proposal

Introduction

ABC is a small company that needs a new CRM. In order to ensure that the new CRM meets the company's needs, ABC needs to undertake the following steps. First, it needs to identify what features and functionality that it needs in a CRM, then it needs to determine whether to make one in-house or to use a third-party CRM. This analysis will be conducted with the systems development life cycle in mind.

Analysis of the Current Situation

ABC has built at in-house customer relationship management (CRM) system, and used it to grow thus far. Customer relationship management systems are used by the sales team in order to not only manage their relationships with prospects, but also with existing clients. The role of the CRM is, at its most basic, to record and store customer information. This includes the basic contact information, but most CRMs will also store the details of client conversations. Essentially, a CRM should put the recorded history of the entire business relationship at the fingertips of the sales staff. On its blog, leading CRM Salesforce describes the core CRM functionality as giving "everyone across the business, including sales, marketing, customer service and business development a better way to manage the customer relationships and interactions that drive success" (Salesforce, 2017).

For the purposes of this scenario, the capabilities in the in-house solution are not known. It should be assumed at a) the capabilities of the current in-house solution are irrelevant and b) that the current in-house solution is not very good. The reason for the latter conclusion is that it was probably developed quickly, in order to serve basic functionality needs. A lot of the leading CRMs are quite expensive. Building your own CRM is going to take developer time away from the core product, which ownership would likely have been hesitant to do. In balancing the need to save money on an expensive CRM but keeping in mind the reality that developer time is better spent on the core product, it is likely that ABC put together a bare bones CRM, which is precisely why it isn't scalable and needs to be replaced at this point. So the focus at this point needs to be on the company's needs going forward.

The current situation for ABC is this. The company is still relatively small, at less than 50 employees, but it has a large customer base. Thus, there is cash flow, so the point where the company can look externally. What ABC does is unknown, so developer capacity is also unknown. However, at less than 50 staff, it should be assumed that most of that is in sales and development. If finance, HR, marketing and customer service are taken out of the mix, there are probably around 15-20 of each sales and development staff, skewing towards the latter. Smaller software companies can be heavily focused on the sales function. However, part of achieving operational maturity as a software company is switching from a sales-focused organization to a marketing –focused organization. In fact, integration of sales and marketing functions is a recurring theme in the literature regarding both software marketing and operational maturity (Burghgraef, 2012). CRM maker Hubspot has long advocated that marketing and sales need to work together in the sense that after the low-hanging fruit have been sold, most companies need a strong marketing arm that fills the funnel for the sales team to continue to drive sales forward. Accelerating sales via integration of marketing and sales is surely going to be one of the primary objectives of the new CRM (Savery, 2017).

The other thing that ABC has to take into consideration is that building a CRM is incredibly complex. If the current homemade CRM is no longer good enough, and the company is not in the CRM business itself, its development talent might not have the capacity to build a new one, and moreover to do so would be a waste of their time and energy. First, there is the core product to consider. Second, if they can efficiently build a superior CRM that is fit for a company of 50 people with a large customer base, then the reality is that they should be marketing that product as well. Management will have to take opportunity cost into consideration when examining the build versus buy question.

Challenges

The major challenge that this company is facing is that it needs a new CRM. The current CRM was clearly built with the needs of a startup in mind, but the new one has to be built with the needs of a company working through growth and operational maturity in mind. The new system needs to basically start with the marketing function. The workflow is, roughly, as follows. The marketing team, through its various activities, will attract leads into the sales funnel. The first step is that the marketing team needs to qualify the leads, and those who are qualified become prospects. The marketing qualified leads are then passed onto sales. The reason that leads needs to be qualified before being passed to sales is simple – there are only so many man-hours for the sales team. Salespeople are not free, therefore they should only be working on leads that are likely to convert. The conversion rate is a critical component of lead scoring (Vaughn, 2018).

The leads that are qualified and handed off to the sales team will then be worked by this sales team. Typically there are two levels, an opener who will further score the lead, and then a closer whose specialty is, well, closing. The sales cycle, however, does not end there. For most businesses, it is easier and cheaper to win more revenue from existing clients than to find new ones (Morris, 2016). Thus, there should always be a branch of the sales team that is focused on this form of business development. ABC has a large customer base, so there is clearly going to be opportunity to work that existing base and increase sales that way. As Myler (2016) notes, working both new leads and existing clients typically accelerates revenue growth.

The new CRM should function as such. It should allow marketing to easily create a funnel and the appropriate work flows. The marketing team should be able to take leads from a variety of sources, and easily input them into the CRM. Keeping this data clean is a challenge, but necessary, so that the same company is not worked by multiple sales reps as well as to maintain privacy. The reality is that if someone opts out of communications, the legal environment supports that right. Maintaining privacy will become even more important once GDPR comes into effect, assuming that part of the "large customer base" is in Europe, where this strict data privacy law is going to be introduced this year (Nadeua, 2018).

From the moment that the lead is imported into the CRM, there should be a record of all the communications with that customer, whether an automated blog update email sent by the marketing team, a sales call, or after sales any sort of service call or feature request. All of this needs to be logged into the CRM so that the company can present a singular face to the client. That is one of the critical duties of the CRM. For example, you don't want to bother an existing client with multiple sales calls on the same product – the CRM needs to have functionality to assign one individual point of contact for that client, based on their life cycle stage. Lastly, the the current problem suggests, the new CRM has to be scalable. This is still a relatively young company (probably), and therefore there should still be quite a bit of room for growth. In fact, if the company was not planning on growing, it wouldn't need a new CRM, so continue growth should be assumed, and the new CRM has to be able to support that growth by easily collecting and managing clean data.

Security and Privacy

The EU's new data privacy law was mentioned, but each country has specific rules with respect to online privacy. Moreover, any sort of breach or hack can create substantial problems with respect to reputational damage (Steinburg, 2017). Most data suggests that reputational damage can actually be one of the biggest sources of damage resulting from security breaches. ABC will need to work with a CRM that truly has enterprise-grade security. Again, this is one of the reasons why building a CRM is an incredibly complex task. Working with a larger, SaaS-based CRM makes it more likely that the CRM will have complete, up-to-date security in place to protect lead, prospect and client data. It is quite likely that the current information system, being made in-house to support the launch of the company, does not have adequate security measures in place, and it is also unlikely that any in-house solution can be updated as frequently as necessary to manage things like new laws and new threats.

Implementation

There is basically no logical reason why ABC should build its own CRM. From a business perspective, the company would spend countless man-hours producing a CRM that will not be as good as the current solutions on the market. If the other solutions are better, than ABC's competitors will be working with superior systems that give them competitive advantage. If ABC has the ability to build a competitive quality CRM, it should enter the CRM business, and that is a much bigger strategic decision than the rather short-sighted buy or build question. Furthermore, there is the opportunity cost to take into consideration. If ABC's developers are spending hundreds of man-hours trying to reinvent the CRM wheel, then those are hours the developers are not spending on the core product. Remember that in this scenario ABC is a software company, and as such it should be focusing on increasing the competitiveness of its core products.

Buying an outside solution will reduce the amount of developer time to a handful of hours. There will still be the need for ensuring that integrations work correctly, maybe some DevOps work to automate some of the workflows that the new system will have, but other than these things and maybe a little troubleshooting, developer time on this project can be minimized.

There is the question of specialized needs. For the most part, it doesn't sound like ABC has any unique needs that would justify the need for its own CRM. There are thousands of software companies out there, and all but the largest enterprises have no real need for in-house solutions. Chances are pretty good that any off-the-shelf CRM will be fine for ABC, as long as it meets the security and privacy specs. If, for the sake of argument, there is a specialized function that is unique to ABC – maybe it serves a vertical with unique needs, for example – then it still doesn't make sense to build an in-house solution. The answer would be to build the unique functionality as a standalone solution and integrate it with the third party CRM. This would allow for the unique needs of ABC to be met, at dramatically reduced developer time, because ABC is buying the standard CRM functionality rather than reinventing that wheel, and only using its in-house talent for unique in-house needs.

Evaluation of the Proposed Solution

There are several issues that the company is facing, that the proposed solution will resolve. First is the scaling issue. Third party CRMs are always built to be scalable. Most are SaaS applications, which basically means that they are infinitely scalable. Not every SaaS application is scalable, but any of the major CRMs will be (Bogaert, 2014). These can be very large companies and they will serve clients much larger than ABC. One of the challenges have building a CRM in-house is that it will necessarily be held in local servers, and that inhibits scalability. A SaaS solution will put the onus of scalability on the CRM, and any major CRM will be scalable well beyond ABC's needs.

Another issue is streamlining of operations. When a company is small, it is usually sales-focused. But at this point in ABC's operational maturity, it needs a solution that integrates marketing, sales, and customer service. The recommended CRM will allow the company to define its lead scoring, its workflows, as well as its sales process through the entire sales cycle, including once the prospect becomes a customer. Having the customer's entire interaction history stored in one place makes for an incredibly efficient operation, where one hand always knows what the other hand has been doing. The key to the effectiveness of a modern CRM is that they keep all information – the entire history of your interactions with your customers – in one place. Thus, there is no friction with respect to the flow of information between the different departments of your company. A great CRM will also incorporate billing, looping in your finance department. So for example, if someone is behind on their invoices, a sales or service rep will know that, and be able to incorporate that into whatever communications occur. Getting everybody in ABC on the same page is one of the most important elements of using a CRM. There are probably significant operational efficiency gains to be made, especially during the marketing and sales cycles, compared with the legacy system.

There are two ways to look at cost effectiveness. First, there is the buy versus build question, and there is no doubt that buy is more cost effective at this point. Building a basic CRM may have been more cost effective initially, but there comes a point when an in-house solution just costs too much – in terms of developer time and opportunity cost – to build. Think about it this way. If your developers are building a CRM instead of working on your core product, and a competitor introduces new features that leapfrog your product technologically, then not only did you just spend a bunch of money building a CRM you could have bought, but you also lost your position in the market because you got distracted. You might never recover your position of technological advantage once you've ceded it. If that happens, the opportunity cost would be considerable, and could even put the viability of the business at risk. Not to mention, the deployment time of an outside solution is going to be much shorter than building one, because it's already been built, and for most SaaS CRMs all you have to do is sign up ,migrate your data, and go. Deployment can be a matter of days, rather than months.

The other way to look at cost effectiveness is on an ongoing basis. There are clear operational efficiency gains from using the third party option. The CRM is probably going to be better. Security will be more up-to-date. The solution will be built with the needs of companies just like ABC in mind, and therefore will already have features that ABC may not have even realized it needs yet. At the end of the day, working with an outside CRM gives ABC access to the best technology, from which it gain achieve the greatest efficiency gains. In terms of day-to-day operating costs, the savings should be apparent almost immediately.

Data Quality and Security

The security issue is pretty easy to figure out. ABC needs to understand its security specs, and ensure that the solution meets those. Most major CRMs are SOC 2 compliant, so this shouldn't be a huge issue. Data quality can be an issue. Using a single CRM that has been designed to integrate marketing, sales and service is probably the best way to ensure that data stays clean; the risk of dirty data is greater when data has to move from one system to another, and when different teams work off of different systems. ABC definitely needs to build into its specs when evaluating options the need to maintain clean data, which will probably lead to using one system. It will probably still have to hire someone whose job will be to clean data, so that the sales team can spend its time selling and not worrying about data quality.

Specs

It is recommended that a SaaS CRM is used. The company will handle installation of any hardware – if there is a need for hardware at all. Most are built to work with Mac and Windows operating systems, so unless ABC is using something else, there shouldn't be an issue there. In a perfect world, the off-the-shelf solution will be sufficient but many times that is not the case. The in-house development team might have to contribute some integrations or build out specific functionality. The head of the dev team should definitely be involved in all meetings with the final choices, in order to effectively evaluate what the dev team will need to contribute to the project, and whether it has that talent in-house.

Implementing

Implementing a SaaS solution is, more or less, as easy to signing up. In this case it will be a little bit more complex, but not initially. The biggest issue will be migrating the data from the existing CRM, which was built in-house, to the new one. No integration will exist, so the in-house team will definitely need to build one. Any CRM chosen will need to have the right API keys available to facilitate this. That is probably the biggest element in implementation, aside from things like training. Once data migration has been figured out, the sales team can get to work. The entire point of using a third party system is to avoid a multi-month, complex implementation process.